Supply Network Limited (ASX:SNL), the owner of the Multispares truck and bus parts business, has a Dividend Reinvestment Plan (DRP) that allows eligible shareholders to take new shares instead of cash when the plan is in operation. ASX dividend notices show the plan operated on both FY25 dividends at a 2.5% discount to the market price. However, the company has confirmed that the DRP will not operate for the FY26 final dividend of 44 cents per share, which was declared alongside a higher full-year result.

Latest developments

Supply Network reported FY26 Revenue of $403.7 million, up about 15.4% on $349.9 million in FY25. Net profit after tax rose 19% to $47.6 million from $40.0 million, and Basic Earnings Per Share (EPS) increased to 109.0 cents from 92.9 cents.

The board declared a fully franked final dividend of 44 cents per share, up from 38 cents a year earlier. Together with the 36 cent interim, dividends declared for FY26 total 80 cents per share, compared with 70 cents for FY25. The company stated that its DRP will not be operating in respect of the final dividend, so the dividend is payable in cash.

Alongside the result, the company said it has targeted revenue growth of around $50 million in FY27. More recently, substantial holder notices lodged with the ASX showed Antipodes Partners with 6.92% and Pinnacle Investment Management Group, together with its controlled entities, with 9.70%.

Key numbers

Supply Network's two FY26 dividends, the 36 cent interim and the 44 cent final, total 80 cents per share, and both were fully franked. This compares with FY25 dividends of 32 cents (interim) and 38 cents (final), a total of 70 cents per share.

The final dividend carries franking credits at the 30% company tax rate, and the value of those credits depends on each shareholder's tax position.

About the company

Supply Network operates trading businesses in Australia and New Zealand under the Multispares brand, supplying aftermarket replacement parts for trucks, buses and other commercial road transport equipment. It is based in Pemulwuy in Sydney's west and is a long-established ASX-listed company.

The company has been investing in capacity. Recent work includes a new Rosedale branch in North Auckland that opened during FY26, a racking expansion at its Hamilton distribution centre, IT and Warehouse system upgrades, and integration of its Sydney and Melbourne distribution centres. Planned projects include larger sites at Eagle Farm, Canberra, Toowoomba and Kwinana, and a new Penrith branch with an expected development cost of about $9 million, anticipated to open in early FY28.

How the DRP works

SNL's DRP allows eligible shareholders to reinvest dividends into new shares instead of receiving cash when the board decides the plan will operate for a particular dividend. For the FY25 interim and final dividends, the ASX dividend notices showed the plan operating at a 2.5% discount to the volume-weighted average price (VWAP) of SNL shares over the five Business days starting on the ex-dividend date, subject to a maximum price cap, with newly Issued Shares allotted to participants. The DRP price for the FY25 final dividend was set in line with this methodology and confirmed in an updated dividend notice.

Cash is the default, so holders who do not elect to participate are paid in cash. For the FY26 final dividend, the company's dividend notice and results announcement state that the DRP is not applicable, so no DRP pricing, discount or cap applies to this dividend. Any decision to operate the DRP for future dividends, and the applicable terms, would be set by the board and disclosed in the relevant dividend notice.

Why it matters for income investors

The dividend has increased as earnings have grown, with FY26 dividends of 80 cents per share compared with 70 cents in FY25, and both FY26 payments were fully franked.

When the DRP operates with a discount, participating holders receive new shares below the relevant average Market Price and without brokerage, and those shares are themselves eligible for later dividends. Shares are allocated at the price determined over each pricing period, and the plan rules set out participation options. Because the DRP is not operating for the FY26 final dividend, all eligible shareholders will receive this dividend in cash.

What comes next

The FY26 final dividend is scheduled to be paid in cash. The upcoming Annual General Meeting will be held in Sydney, where shareholders will vote on the remuneration report, the re-election of director Greg Forsyth and a proposed share issue to Managing Director Geoffrey Stewart under the Employee Incentive Plan.

The company has flagged its targeted revenue growth of around $50 million for FY27 and the timing of its branch expansions. Any future dividend amount, franking level, or decision on whether the DRP will operate and on what terms, will be determined by the board and disclosed in a dividend notice.

Risks and context

Past dividends are not a guide to future dividends. Future dividend growth is likely to depend on continued profit growth, while the expansion program also calls on cash. The company flagged headwinds in the second half of FY26, including the impact of Middle East hostilities on diesel and lubricant costs and on product sourcing.

Where the DRP operates, reinvested dividends are still assessable income, and each DRP parcel sets a new cost base for Capital Gains Tax purposes. New DRP shares also add to the share count. Company-specific risks include freight activity, competition and supply-chain disruption.

Conclusion

Supply Network (ASX:SNL) declared a higher fully franked final dividend of 44 cents per share following higher FY26 revenue and profit. The company's DRP, which operated at a 2.5% discount on both FY25 dividends, will not operate for the FY26 final dividend, so that dividend will be paid in cash. Payout levels, expansion spending and any future DRP decisions remain matters for the board.

Key Insights

Supply Network (ASX:SNL) lifted FY26 revenue to $403.7 million and net profit to $47.6 million, and increased total fully franked dividends to 80 cents per share from 70 cents in FY25. The final dividend of 44 cents per share is payable in cash because the company has stated that its DRP will not operate for this dividend.

The DRP remains in place and operated for both FY25 dividends at a 2.5% discount to the five-day VWAP, with new shares issued. Whether it operates for future dividends, and on what terms, depends on board decisions disclosed in future dividend notices, while the company pursues its targeted FY27 revenue growth and network expansion.